Governments ditch the threats as a 'nudge' works better

3 June 2014

The Straits Times

By Jonathan Pearlman

FOR years, governments have resorted to strict enforcement measures to force people to pay taxes or fines. But they have now discovered a far more effective approach: by being personal, helpful and polite.

This emerging approach to policy-making, increasingly being adopted around the world by governments including Singapore's, is premised on the use of "behavioural insights" - or people's everyday behaviour patterns - to encourage citizens to act differently.

In Australia, the largest state of New South Wales (NSW) has used this so-called "nudge" approach to overhaul the way it collects fines, such as by telling people that 80 per cent of their fellow citizens pay fines on time.

A trial also found that changes in the wording of bills, such as saying "you owe" rather than "amount owed", led to a 12 per cent increase in people paying tax on time, and a 5 per cent increase in timely fine payments.

The state believes the new approach can help it raise an extra A$10 million (S$11.6 million) a year.

Britain, which has set up a dedicated behavioural insights unit to advise on making changes based on "how, why and when people make the choices they do", has seen similar success as well.

By simply changing the tax form to tell people that most residents in their communities had already paid their taxes, the government was able to collect about £30 million (S$63 million) in terms of earlier tax payments.

The British government also encouraged an extra 100,000 people a year to carry organ donor cards by adopting a personal message that said: "If you needed an organ transplant, would you have one?"

"We've already achieved some good results, but the use of behavioural insights in government has the potential to tackle bigger and more complex social problems and help transform the customer experience across the public sector," said NSW state premier Mike Baird in a statement.

At a conference in Sydney yesterday billed as the world's first behavioural insights conference, a director at Singapore's Ministry of Finance, Dr Thia Jang Ping, said he believed the approach could be used in Singapore to improve people's interactions with job centres or to "nudge" people to drive less. Drawing laughter from the large audience, he joked that it might even find ways to "nudge" Singaporeans to have more babies.

Dr Thia, director of the ministry's Transformation Office, said the approach was gaining ground among policymakers in Singapore.

He told The Straits Times that the aim was to "get the citizen to make decisions that are beneficial for them without the use of overt monetary incentives".

For instance, behavioural insights had helped in the decision to provide free MRT rides before 7.45am as a way to smooth the peak-hour rush. Even though savings to passengers were minimal, he said, free rides were far more successful in changing behaviour than just reducing the fare.

Other potential areas, he added, include encouraging people to eat healthy food or exercise, or to save more for their retirement.

Other Singaporeans addressing the conference include Mr Donald Low, of the Lee Kuan Yew School of Public Policy, and Mr Han Siong Ngan, an industrial designer at Alexandra Health System, who has advised Khoo Teck Puat Hospital. A conference spokesman said the hospital had used behavioural insights to reduce pressure on emergency rooms by having more home visits for the elderly and to improve communication on vaccines.